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How to Start a Mortgage Business

A mortgage loan (also called mortgage) is used by either purchasers of real property to generate funds to buy real estate; or can alternatively be used by existing property owners to generate funds for any reason, while putting a security interest on the property being mortgaged. The loan is "secured" on the borrower's property.This implies that a legal mechanism has been set up allowing the lender to take possession and sell the secured property ("repossession" or "foreclosure") to pay off the loan if it happens that the borrower is unable to pay back the loan or if he/she acts otherwise by not abiding to its terms. Mortgage borrowers can be individuals mortgaging their homes or they can be companies mortgaging commercial property (for example, it could be their business premises, an investment portfolio or residential property let to tenants). The lender will usually be a financial institution, such as a bank, building society or credit union depending on the country in question and the loan arrangements can be made either indirectly or directly through intermediaries. Characteristics of mortgage loans such as the size of the loan, interest rate,maturity of the loan, method of paying off the loan etc. can vary considerably.

Starting your own business in the mortgage loan sector may be simpler than it sounds.The rewards of setting your own hours and retaining your commissions are attractive to many.You can avoid office politics and drama and create your own advancement opportunities. You have to keep in mind that handling some logistics adequately will be necessary to get your mortgage loan business up and running.

If you have experience working as a loan officer or a loan originator for a mortgage company, you may have the foundation of what you'll need to start your own mortgage business. If you also possess the urge/desire to be a small business owner, then all you have to do is get a grip on the business side of starting and operating your own mortgage company to combine your experience with your ideals.

At some point after obtaining a mortgage broker's license, some licensees begin to marvel how to start a mortgage company. Instead of making a percentage of a commission, the licensee knows he/she could be receiving a larger paycheck.

Start off with a license

From the start, the first step is obviously to obtain the license. If you don't have one yet, that should be your number one priority. Rules for obtaining a mortgage broker's license differ from state to state. Consult your state's official government website to learn the unique rules. With the license in hand, there are two basic methods to start a mortgage business. One way is to start a net branch. The other way is to start an independent mortgage business from scratch. Of these, the first method is the easiest and least expensive. There are pros and cons of each method.

The net branch

The net branch is a unique business; however, it is created under an existing mortgage company. The advantages of working under a larger corporation are countless.

Pros

  • Credibility, reputation, recognition and power of a brand name.
  • Back office support exists already.
  • Procedures and policies are already in place.
  • Powerful network already created.
  • Ongoing support and advice at your beg and call.
  • Relationships with banks exists already.
  • Can operate a net branch from home office if you so desire.
  • Can operate a net branch with only one or two people.

Cons

  • Must follow established policies and procedures of the pioneer company.
  • Don't always get the "last word."
  • Less commission than if you were working on your own. Imagine 100% commission for an independent broker whereas a net branch broker gets 70%.  Nevertheless, both sums are much larger than non-owners would make.

The independent mortgage brokerage

The surprising advantage of the independent mortgage office is that the owner receives all the commission for the loan. The commission does not have to be shared. Begin by creating a check list with each step clearly written down toward the ultimate objective. Check them off as each task is completed.

To start an independent office from scratch requires all the usual hurdles to starting any company. Decide on a name. Set up the legal structure, whether it will be a Partnership, Sub Chapter S Corporation or another structure. Choose a location. Rent an office in a high visibility and accessible setting, or work from a home office if you plan to meet clients in their homes. Print business cards, signage and letterhead. Take care of office supplies, accounting and staffing.

Attend to the mortgage brokerage end of the business. Create relationships with wholesale lenders and banks you plan to do business with. The more lenders you have, the more loan products you can offer clients. Cultivate partnerships and relationships with vendors, credit report vendor,including an appraiserand a title/escrow settlement service provider. Develop, implement and enforce a marketing strategy to get clients. Build your reputation, trust and brand image.

Pros

  • Set your own rules, policies and procedures.
  • You do not have to share your commission.
  • Make commission from loans closed by agents you employ and train.
  • Joy of independence and sense of accomplishment.
  • Growth avenues are numerous

Cons

  • Time-consuming activities include: marketing, administration, auditing, hiring a processor and secretarial staff, accounting, training, courting clients,lead generation, networking and establishing relationships with bankers. All of these consume valuable time which could have been used in meeting clients and closing loans.
  • Takes time to build trust and establish your brand.
  • Not an easy task to cultivate relationships with wholesale lenders considering that each has their own approval process.
  • The staff you employ and train may become your future competition.
  • You need to establish a support network.

As you start thinking about how to start a mortgage business, you discover the many pieces of the puzzle that have to be put together. All you have to tell yourself is that others have gone through these hurdles and so can you! The benefits of owning your own mortgage company will make the work seem easy and well worth it in the end.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Mortgage business, Mortgage business,commission, commission, Loan, Loan, Payment, Payment, Credit, Credit, Interest, Interest,mortgage broker, mortgage broker,

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